WALLA WALLA, Wash., July 28, 2016 (GLOBE NEWSWIRE) -- Key Technology, Inc. (NASDAQ:KTEC) announced today sales and operating results for its fiscal 2016 third quarter, ended June 30, 2016.
Third Quarter Overview
Net sales for the three months ended June 30, 2016 totaled $36.2 million, compared to $30.8 million recorded in the corresponding quarter last year. The Company reported net earnings for the quarter of $1.0 million, or $0.16 per diluted share, compared to net earnings of $0.3 million, or $0.05 per diluted share, in the same period a year ago.
The gross profit for the third quarter of fiscal 2016 was $10.7 million, compared to $9.2 million in the corresponding period last year. As a percentage of net sales, gross profit was 29.4% and 30.0% in the third quarter of fiscal 2016 and 2015, respectively. Operating expenses for the quarter ended June 30, 2016 were $8.9 million, or 24.5% of net sales, compared to $8.6 million, or 28.0% of net sales, in the same quarter last year.
Nine Month Year-to-Date Overview
Net sales for the nine months ended June 30, 2016 were $89.5 million, compared with $72.5 million for the comparable period in fiscal 2015. The Company reported a net loss for the fiscal 2016 nine-month period of $1.2 million, or $0.19 per diluted share, compared to a net loss of $3.5 million, or $0.55 per diluted share, for the corresponding nine-month period in fiscal 2015.
For the nine-month period ended June 30, 2016, gross profit was $26.1 million, compared to $20.4 million for the same nine-month period of fiscal 2015, or 29.2% and 28.2% of net sales, respectively. Operating expenses for the nine-month period ended June 30, 2016 were $27.4 million, or 30.6% of net sales, compared to $25.9 million, or 35.8% of net sales, for the corresponding period of fiscal 2015. As previously disclosed, operating expenses in the first quarter of fiscal 2016 included approximately $0.7 million of restructuring charges recorded in general and administrative expenses.
Jack Ehren, President and CEO, commented, “In the third quarter of fiscal 2016, we realized one of the highest quarterly sales levels in our company history. Additionally, net sales for the first nine months were up 24% over the same period in the prior fiscal year. Our net earnings of $0.16 per share for the third quarter was our highest quarterly net earnings since fiscal 2013. Our strong beginning backlog and solid bookings for the quarter enabled us to achieve higher sales and favorable factory utilization, and resulted in gross margins remaining consistent at just under 30%, despite an extremely high mix of process systems sales in the quarter. In addition, we effectively controlled our overall operating expenses in the third quarter, even with the increased sales activity.”
Orders and Backlog
Key's backlog at the end of the third quarter of fiscal 2016 was $33.9 million, compared to $29.9 million one year ago. New orders received during the third quarter were $32.0 million, compared to $28.5 million in the corresponding period last year. New orders for the nine months ended June 30, 2016 were $92.3 million, compared to $84.1 million for the corresponding period in fiscal 2015.
Ehren stated, “Our global orders in the third quarter were again strong, most significantly in North America. Orders in this region included a large seven-figure order received from a major potato processor.”
Ehren continued, “Our backlog at the end of the third quarter remains strong, even after the higher sales recorded in the quarter. Orders for the first nine months of fiscal 2016 included strong contributions from both the North America and EMEIA regions. European orders in euros continue to exceed the prior year’s record order levels, and North American orders in our core markets are significantly higher than our prior year orders. We continue to see solid opportunities in these regions for the last quarter of fiscal 2016 and into fiscal 2017, most significantly in the processed potato and processed fruit and vegetable markets.”
Ehren added, “Subsequent to the end of the third quarter, we received a significant multi-million dollar order for our new integrated VERYX® belt-fed optical sorting solutions. This order is for expansions at several plant locations of a major European potato processor.”
Conclusion
Ehren concluded, “We continue to make important and encouraging progress on the further development of our VERYX platform. We have started shipping our first VERYX production units for selected applications, and overall global customer feedback from new installations and our ongoing global beta test sites continues to be very positive. As noted above, we have also started to accept orders in additional primary core markets, with shipments for these applications expected to begin in late calendar year 2016. We remain committed and focused on executing on our long-term strategy and generating positive returns for the company and our shareholders.”
Conference Call
The Company's conference call related to the fiscal 2016 third quarter can be heard live on the Internet at 2:00 p.m. Pacific Time on Thursday, July 28, 2016.
To access the call and audio webcast:
| Phone -- | Q&A participation: |
| Toll-Free: 877-341-5668 International: 224-357-2205 | |
| Internet -- | Audio webcast: |
| http://edge.media-server.com/m/p/vdjf9zdt | |
| Replay -- | Available through Thursday, August 11, 2016 |
| http://edge.media-server.com/m/p/vdjf9zdt |
About Key Technology
Key Technology (NASDAQ:KTEC) is a global leader in the design and manufacture of process automation systems including digital sorters, conveyors, and processing equipment. Applying processing knowledge and application expertise, Key helps customers in the food processing and other industries improve quality, increase yield, and reduce cost. An ISO-9001 certified company, Key manufactures its products at its headquarters in Walla Walla, Washington, USA; and in Beusichem, the Netherlands; Hasselt, Belgium; and Redmond, Oregon, USA. Key offers customer demonstration and testing services at five locations including Walla Walla, Beusichem, and Hasselt as well as Sacramento, California, USA and Melbourne, Australia; and maintains a sales and service office in Santiago de Queretaro, Mexico.
Forward-Looking Statements
Certain statements in this press release may be forward-looking statements for purposes of the Private Securities Litigation Reform Act of 1995. These statements may relate to expected results of operations or gross margins; expected trends in sales, orders, earnings and other financial measures; projected expenses, including general and administrative expenses; national and international economic conditions; the effect of foreign exchange fluctuations; or other future occurrences. Actual results could differ materially from those anticipated in the forward-looking statements as a result of a variety of economic, competitive, and governmental risks and uncertainties. These risks and uncertainties include, among other things: factors that could increase our cost of operations and reduce gross margins and profitability, including expanding into new markets, undertaking complex projects and applications, increasing research and development expenses, and offering increasingly integrated products; acquisitions that may harm our operating results; failure of our existing and new products to compete successfully, which could result in the loss of market share and a decrease in our sales and profits; significant investments in unsuccessful research and development efforts; industry consolidation increasing competition in the food processing equipment industry; advances in technology by competitors adversely affecting our sales and profitability; the failure of our independent sales representatives to perform as expected, thereby harming our net sales; our dependence on certain suppliers leaving us temporarily without adequate access to raw materials or products; and increased or unanticipated costs associated with product warranties adversely affecting our profitability. These and other risk factors are discussed in our filings with the Securities and Exchange Commission, including in Item 1A, "Risk Factors," of our Annual Report on Form 10-K for the fiscal year ended September 30, 2015. We undertake no obligation to update or revise any forward-looking statements in this press release as a result of subsequent developments, except as may be required by law.
News releases and other information about Key Technology, Inc. can be
accessed at www.key.net.
(Financial Tables to Follow)
| Key Technology, Inc. and Subsidiaries | |||||||||||||||
| Statement of Selected Operating Information | |||||||||||||||
| (Unaudited, in thousands, except per share data) | |||||||||||||||
| Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||
| 2016 | 2015 | 2016 | 2015 | ||||||||||||
| Net sales | $ | 36,207 | $ | 30,810 | $ | 89,520 | $ | 72,482 | |||||||
| Cost of sales | 25,553 | 21,573 | 63,417 | 52,063 | |||||||||||
| Gross profit | 10,654 | 9,237 | 26,103 | 20,419 | |||||||||||
| Operating expenses: | |||||||||||||||
| Sales and marketing | 4,135 | 4,146 | 12,293 | 12,342 | |||||||||||
| Research and development | 2,719 | 2,296 | 7,911 | 6,554 | |||||||||||
| General and administrative | 1,781 | 1,844 | 6,261 | 5,912 | |||||||||||
| Amortization of intangibles | 235 | 356 | 887 | 1,128 | |||||||||||
| Total operating expenses | 8,870 | 8,642 | 27,352 | 25,936 | |||||||||||
| Gain on disposition of assets | 13 | 8 | 10 | 10 | |||||||||||
| Earnings (loss) from operations | 1,797 | 603 | (1,239 | ) | (5,507 | ) | |||||||||
| Other income (expense) | (228 | ) | (156 | ) | (758 | ) | (228 | ) | |||||||
| Earnings (loss) before income taxes | 1,569 | 447 | (1,997 | ) | (5,735 | ) | |||||||||
| Income tax expense (benefit) | 534 | 152 | (784 | ) | (2,256 | ) | |||||||||
| Net earnings (loss) | $ | 1,035 | $ | 295 | $ | (1,213 | ) | $ | (3,479 | ) | |||||
| Net earnings (loss) per share | |||||||||||||||
| - basic | $ | 0.16 | $ | 0.05 | $ | (0.19 | ) | $ | (0.55 | ) | |||||
| - diluted | $ | 0.16 | $ | 0.05 | $ | (0.19 | ) | $ | (0.55 | ) | |||||
| Shares used in per share calculations - basic | 6,369 | 6,280 | 6,309 | 6,274 | |||||||||||
| Shares used in per share calculations - diluted | 6,369 | 6,301 | 6,309 | 6,274 | |||||||||||
| Key Technology, Inc. and Subsidiaries | |||||||
| Balance Sheet Information | |||||||
| (Unaudited, in thousands) | |||||||
| June 30, 2016 | September 30, 2015 | ||||||
| Cash and cash equivalents | $ | 4,771 | $ | 7,726 | |||
| Trade accounts receivable, net | 19,913 | 14,836 | |||||
| Inventories | 30,803 | 31,297 | |||||
| Deferred income taxes | 3,904 | 3,972 | |||||
| Prepaid expenses and other assets | 3,602 | 4,108 | |||||
| Total current assets | 62,993 | 61,939 | |||||
| Property, plant and equipment, net | 14,052 | 14,799 | |||||
| Deferred income taxes | 3,548 | 2,917 | |||||
| Goodwill | 10,131 | 10,223 | |||||
| Investment in Proditec | 1,127 | 1,127 | |||||
| Intangibles and other assets, net | 5,529 | 6,541 | |||||
| Total assets | $ | 97,380 | $ | 97,546 | |||
| Accounts payable | $ | 9,319 | $ | 10,800 | |||
| Accrued payroll liabilities and commissions | 5,400 | 5,452 | |||||
| Customers' deposits | 6,902 | 4,712 | |||||
| Accrued customer support and warranty costs | 2,293 | 2,618 | |||||
| Customer purchase plans | 1,818 | 1,506 | |||||
| Short term borrowings | 1,000 | — | |||||
| Current portion of long-term debt | 600 | 705 | |||||
| Other accrued liabilities | 1,179 | 1,315 | |||||
| Total current liabilities | 28,511 | 27,108 | |||||
| Long-term debt | 4,711 | 5,149 | |||||
| Deferred income taxes | 1,815 | 2,144 | |||||
| Other long-term liabilities | 376 | 408 | |||||
| Shareholders' equity: | |||||||
| Common stock | 33,952 | 32,676 | |||||
| Warrants | — | 665 | |||||
| Retained earnings and other shareholders' equity | 28,015 | 29,396 | |||||
| Total shareholders' equity | 61,967 | 62,737 | |||||
| Total liabilities and shareholder's equity | $ | 97,380 | $ | 97,546 | |||